The Finance Ministry intends to keep a careful watch on how Friday’s plunge in the New York stock market could affect the Japanese economy, Vice Finance Minister Nobuaki Usui said Monday.
“There appear to be mixed views about what impact it will have on Japanese stock prices,” Usui said at a regular news conference.
He said he understands that the warning to the market by U.S. Federal Reserve Chairman Alan Greenspan was a factor behind the fall in the Dow Jones industrial average, which briefly dipped below 10,000 for the first time in six months.
Greenspan said Thursday that investors may be underestimating the risk inherent in U.S. equities.
“I have the impression that (the U.S. economy) is considered somewhat overheated,” Usui said.
Meanwhile, the nation’s 12 major and second-tier securities firms are expected to report profits for the first half of fiscal 1999, thanks to increased market activity, industry sources said Monday.
Pretax profits for Nomura Securities Co., the leading brokerage, will likely exceed 100 billion yen for the first time in nine years.
Two other major firms — Nikko Securities Co. and Daiwa Securities Co. — and nine second-tier firms will manage profits for the six-month period through Sept. 30, the sources said.
Increased revenue on handling fees brought by greater trading volume as well as progress in restructuring are cited as reasons for the positive development.
Daily trading volume on the Tokyo Stock Exchange during the April-September period averaged 740 billion yen, twice the figure for the corresponding period last year.
The full-scale liberalization of commissions, which began this month, however, will likely further intensify competition, and Japanese brokerage houses urgently need to reinforce their revenue bases, the sources said.
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